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OPR Appendix (2008 IRPAC Report)

Date

 

 

Mr. John Q. Practitioner

Certified Public Accountant

123 Main Street

Anytown, XX 12345-6789

 

 

Dear Mr. Practitioner:

 

This letter is in regard to your eligibility to practice before the Internal Revenue Service and is being sent pursuant to section 10.60 of Treasury Department Circular No. 230 (31 CFR Part 10, effective September 26, 2007), a copy of which is enclosed.[1]

 

This office has received information raising questions of your violation of Subpart C, section 10.51(a)(6) (formerly known as section 10.51(f)) of the regulations governing practice before the Internal Revenue Service as contained in Circular 230. 

 

A review of your personal tax filing history reveals that …[specific facts are inserted here].  This pattern of non-compliance on your personal [and business] returns suggests a violation of section 10.51(a)(6) of Circular 230.

 

  • Disreputable conduct for which a practitioner may be censured, suspended, or disbarred from practice before the Internal Revenue Service includes section 10.51(a)(6), “Willfully failing to make a Federal tax return in violation of the Federal tax laws, or willfully evading, attempting to evade, or participating in any way in evading or attempting to evade any assessment or payment of any Federal tax.”

 

Further action with respect to the above information will be held in abeyance for a period of 30 days from the date of this letter.   Within that time, you are afforded an opportunity to submit a written response to this letter with your explanation of the foregoing matters.  You may request a conference at this office after your written response has been submitted for review.  If you wish a conference, please provide alternative dates and times that would be convenient for you.  A power of attorney must be submitted should you engage the services of a representative.

 

Your response is requested within 30 days.  Should you have any questions, please contact [Name of OPR Attorney], Enforcement Attorney, by phone at (202) 622-XXXX, by fax at (202) 622-XXXX, by email (non-secure) at [name.of.attorney@irs.gov], or by correspondence at:  Internal Revenue Service, Office of Professional Responsibility, Attn: SE:OPR,

1111 Constitution Avenue, N.W. , Room 7238/IR, Washington , DC   20224

 

 

Sincerely,

 

Michael R. Chesman

Director

Office of Professional Responsibility

 

Enclosure


 

Appendix A-2

 

Allegation Letter - Recommendations

 

 

Date

 

 

NOTICE OF POTENTIAL DISCIPLINARY ACTION

 

 

 

John Q. Practitioner

Certified Public Accountant

123 Main Street

Anytown, XX 12345-6789

 

 

Dear Practitioner:

 

This letter is being sent pursuant to section 10.60 of Treasury Department Circular No. 230 (31 CFR Part 10, effective September 26, 2007), a copy of which is enclosed.[2]

 

This office has received information sufficient to raise questions as to whether there has been a violation of Subpart C, section 10.51(a)(6) (formerly known as section 10.51(f)) of the regulations governing practice before the Internal Revenue .

 

A review of your personal tax filing history reveals that [specific facts are inserted here].  This pattern of non-compliance with respect to your individual [and business] tax returns suggests there is a violation of section 10.51(a)(6) of Circular 230.

 

  • Disreputable conduct for which a practitioner may be censured, suspended, or disbarred from practice before the Internal Revenue Service includes section 10.51(6), “Willfully failing to make a Federal tax return in violation of the Federal tax laws, or willfully evading, attempting to evade, or participating in any way in evading or attempting to evade any assessment or payment of any Federal tax.”

 

Any action with respect to the above information will be deferred for a period of 30 days from the date of this letter.    Within that time, you may submit a written response to this letter with any detail or additional information you believe will assist us in making a determination as to whether a violation has in fact occurred.  You also may include a request for a conference with a representative from this office along with your written response.  The conference may be by phone or in person.  If you wish to avail yourself of the opportunity for a conference please indicate your preference for a telephonic or in person conference and provide alternative dates and times that will be convenient for you.  You may engage the services of a representative at any juncture during this process, please submit a power of attorney if you will be represented. 

 

We urge you to respond to this allegation letter within the 30 day period.  By responding, you have the opportunity to present your side of the case.  OPR will carefully consider whatever you may choose to submit.  OPR routinely considers the circumstances surrounding the alleged violation, and even after verifying that the violation has occurred, may, depending upon the response received, reduce the sanction sought.  Additionally, if you were able to provide exculpatory evidence, your case could be closed. 

 

Please note, section 10.20(a)(1) of Circular 230 requires you to submit records or information upon a proper and lawful request of the Service. 

 

A failure to respond to this letter may result in disciplinary action being taken both on the merits and for failure to cooperate.  

 

Should you have any questions, please contact [Name of OPR Attorney], Enforcement Attorney, by phone at (202) 622-XXXX, by fax at (202) 622-XXXX, by email (non-secure) at [name.of.attorney@irs.gov], or by correspondence at:  Internal Revenue Service, Office of Professional Responsibility, Attn: SE:OPR,

1111 Constitution Avenue, N.W. , Room 7238/IR, Washington , DC   20224

 

Sincerely,

 

Michael R. Chesman

Director

Office of Professional Responsibility

 

Enclosure

 

 

Appendix B-1

 

OPR Consent Letter


[Offer of Consent to Censure in Practice before the Internal Revenue Service]

 

[Offer of Consent to (Suspension or Disbarment) from Practice   before the Internal Revenue Service]

 

To the Office of Professional Responsibility (OPR), Internal Revenue Service (IRS):

 

1.  I,                            , [print or type practitioner's name]   hereby offer my consent to [censure in practice before the IRS] [suspension or disbarment from practice before the IRS)] in lieu of a proceeding being [instituted or continued], ("Offer"), such Offer to be subject to the following terms and conditions.

 

2.  I submit this Offer pursuant to section 10.61(b) of the regulations governing practice before the IRS, which are set out at 31 C.F.R. Part 10, and are published in pamphlet form as Treasury Department Circular No. 230, as revised [September 26, 2007 or other revision date] ("Circular 230").

 

3.  By letter(s) dated [date(s)], receipt of which I acknowledge, OPR alleged that I had violated certain sections of Circular 230.

 

4.  If this offer is accepted, I hereby admit to the following violation(s) of Circular 230:

 

[For all admissions include the Circular 230 section number, section title, and a brief description of the misconduct using the section's language where possible.  The section title, or the brief description of misconduct, or both are return information if they indicate, with respect to the practitioner, the existence, or possible existence, of liability under the Internal Revenue Code for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense; e.g., 10.31, Negotiation of taxpayer checks (title); Willful failure to make Federal tax returns (description of misconduct).  If the section title or description of misconduct is return information, include the type of return or type of return information and taxable year(s) covered by the return or return information.  Indicate type of return by form number.  If the misconduct involves a third party (such as a client), the description of the third party's tax situation should be as general as possible; e.g., Lack of due diligence in preparing client's tax return; not, understating client's income by $20,000.]

 

[Examples]

 

a.

[Circular 230 section number and title:  10.22, Diligence as to accuracy

Misconduct:  Lack of due diligence in preparing client's tax return

Type of return information:  Liability for preparer penalty

Taxable year covered by the return information:  2006]

 

b.

[Circular 230 section number and title:  10.29, Conflicting interests

Misconduct:  Representation of one client was directly adverse to representation of another client]

 

c.

[Circular 230 section number and title:  10.51, Incompetence and disreputable conduct

Misconduct:  Willful failure to make Federal tax returns

Type of returns:  Forms 1040

Taxable years covered by the returns:  2005 and 2006]

 

This statement of misconduct is conditional and applies only if the offer is accepted and, if not accepted, such statement of misconduct shall be inadmissible at the option of the undersigned in all future proceedings.

 

5.  [Include only one of the following.]

 

[A censure is a public reprimand.  I will be under censure for a term of (number of months or years months.]

 

[I will be suspended for a term of (number of months or years).  At the expiration of such term, I will again be eligible to practice before the IRS.]

 

[I will be suspended for a term of at least (number of months or years).  No sooner than 30 days prior to the expiration of such term, I may file a petition for reinstatement to practice before the IRS, and OPR will then entertain my petition.]

 

[I will be disbarred for a term of at least five years.  No soon than 10 days prior to the expiration of such term, I may file a petition for reinstatement, and, pursuant to section 10.81 of Circular 230, after the expiration of such term OPR will entertain my petition.]

 

6.  I understand that during my term of [suspension or disbarment], I will be prohibited from engaging in practice before the IRS as that term is defined in section 10.2 of Circular 230 (including any revision thereto occurring during the term of my [suspension or disbarment]).

 

[Include all of these standard conditions for reinstatement.  The standard conditions do not refer to the practitioner's particular tax situation.]

 

7.  OPR may grant my petition for reinstatement, provided that:

 

a.  I file within six months any Federal and/or State tax returns now due and owing and I pay, or arrange with the IRS, or State taxing authorities, to pay, any outstanding Federal or State tax liabilities;

 

b.  During the term of my [suspension or disbarment], I file timely any Federal and/or State returns that become due and owing and I pay, or arrange with the IRS, or State taxing authorities, to pay, any Federal or State tax liabilities;

 

c. During the term of my [suspension or disbarment], I do not engage in practice before the IRS or make any attempt to do so;

 

d. During the term of my [suspension or disbarment], OPR does not contact me concerning any alleged violations of Circular 230;

 

e. At the time I submit my petition, I am otherwise in compliance with Circular 230; and

 

f.  I submit with my petition documentary evidence that, if my petition is granted, I will be eligible, as defined in Circular 230, to practice before the IRS as [e.g., an attorney, certified public accountant, enrolled agent].

 

8.  I understand that this Offer does not limit, or otherwise alter, the IRS' authority to disclose, as authorized by law, records and information concerning the violations to which I have admitted in this Offer.

 

I understand that such disclosures will include publication in the Internal Revenue Bulletin of a notice of my [censure, suspension, disbarment], including notice of the violations to which I have admitted in this Offer, and that such disclosures may include other disclosures to the general public, including a response to any inquiry from the general public concerning my disciplinary status.

 

I understand that such disclosures may also include disclosure of this Offer, and other records related to the violations to which I have admitted in this Offer, to any public, quasi-public, or private professional authority, agency, or organization that has granted, or hereafter considers granting, or grants me a license to practice law or accountancy, to represent taxpayers before any public authority, or to prepare tax returns; and to any public, quasi-public, or private professional association that has accepted, or hereafter considers accepting, or accepts me as a member.  Such authorities, agencies, organizations, and associations will include, but will not necessarily be limited to, those specifically listed below in this Offer.

 

[If the violations include return information include paragraph 9, if not, move on to paragraph 10.

 

9.  Pursuant to 26 U.S.C. 6103(c), I consent to the disclosure, by the IRS, of my return information contained in this Offer to the persons identified below:

 

To the general public, which will include publication in the Internal Revenue Bulletin of a notice of my [censure, suspension, disbarment], including notice of the violations to which I have admitted in this Offer, and which may include other disclosures to the general public, including a response to any inquiry from the general public concerning my disciplinary status.

 

As listed below, to any public, quasi-public, or private professional authority, agency, or organization that has, at present, granted me a license to practice law or accountancy, to represent taxpayers before any public authority, or to prepare tax returns; and to any public, quasi-public, or private professional association that has, at present, accepted me as a member; also to any public, quasi-public, or private professional authority, agency, organization, or professional association to which I apply, or may apply, for such license or membership within five years from the effective date of my [censure, suspension, disbarment].

 

10.  Under penalties of perjury, I certify that the following is a complete list of all public, quasi-public, or private professional authorities, agencies, or organizations that have, at present, granted me a license to practice law or accountancy, to represent taxpayers before any public authority, or to prepare tax returns; and to any public, quasi-public, or private professional associations that have, at present, accepted me as a member:

 

a.

[Name of authority, agency, organization, or association

State or jurisdiction

Bar number, license number, or member number]

 

b.

[Name of authority, agency, organization, or association

State or jurisdiction

Bar number, license number, or member number]

 

c.

[Name of authority, agency, organization, or association

State or jurisdiction

Bar number, license number, or member number]

 

11.  The signature of the Director, OPR, or his representative, on this Offer will constitute acceptance of this Offer, effective as of the date entered on this Offer by the Director or his representative.  The effective date invokes all of the terms and conditions in this Offer and begins the term of [censure, suspension, or disbarment].

 

[Practitioner's signature]

 

[Practitioner's name; type or print]

 

Date signed:

 

Practitioner's SSN:

 

Practitioner's address:

 

[Signature of Director, OPR, or

representative]

 

[Name of Director, OPR, or

representative; type or print]

 

Title:  [Director, OPR, or representative's title]

 

Effective date:

 

 

Appendix B-2

 

Consent Letter - Recommendations

 


 

[Offer To Consent to Censure in Practice before the Internal Revenue Service]

 

[Offer To Consent to (Suspension or Disbarment) from Practice before the Internal Revenue Service]

 

To the Office of Professional Responsibility (OPR), Internal Revenue Service (IRS):

 

1.  I,                            , [print or type practitioner's name]   hereby offer to consent to [ a censure] [suspension or disbarment] with respect to my practice before the IRS in lieu of a proceeding being [instituted or continued], ("Offer"); such Offer to be subject to the terms and conditions contained herein.

 

2.  I submit this Offer pursuant to section 10.61(b) of the regulations governing practice before the IRS,   as set out at 31 C.F.R. Part 10, and   as published in pamphlet form as Treasury Department Circular No. 230, as revised [September 26, 2007 or other revision date] ("Circular 230").

 

3.  By letter(s) dated [date(s)], receipt of which I acknowledge, OPR has alleged that I have violated certain sections of Circular 230.

 

4.  Contingent on acceptance of this Offer, I hereby admit to the following violation(s) of Circular 230:

 

[For all admissions include the Circular 230 section number, section title, and a brief description of the misconduct using the section's language where possible.  The section title, or the brief description of misconduct, or both are return information if they indicate, with respect to the practitioner, the existence, or possible existence, of liability under the Internal Revenue Code for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense, e.g., 10.31, Negotiation of taxpayer checks (title); Willful failure to make Federal tax returns (description of misconduct).  If the section title or description of misconduct is return information, include the type of return or type of return information and taxable year(s) covered by the return or return information.  Indicate type of return by form number.  If the misconduct involves a third party (such as a client), the description of the third party's tax situation should be as general as possible; e.g., “Lack of due diligence in preparing client's tax return”; not, “understating client's income by $20,000.”]

 

[Examples]

 

 

[Circular 230 section number and title:  10.22, Diligence as to accuracy

Misconduct:  Lack of due diligence in preparing client's tax return

Type of return information:  Liability for preparer penalty

Taxable year covered by the return information:  2006]

 

[Circular 230 section number and title:  10.29, Conflicting interests

Misconduct:  Representation of one client was directly adverse to representation of another client without making requisite disclosures and securing requisite consents.]

 

[Circular 230 section number and title:  10.51, Incompetence and disreputable conduct

Misconduct:  Willful failure to make Federal tax returns

Type of returns:  Forms 1040

Taxable years covered by the returns:  2005 and 2006]

 

5.  [Include only one of the following.]

 

[  I agree to   a censure    and fully understand and agree that a censure is a public reprimand involving disclosure of all information relevant to such discipline.

 

[I accept a suspensionfor a period of (number of months or years) and fully understand and agree that a suspension is public discipline involving disclosure of all information relevant to such discipline. At the expiration of the suspension period, I will  be eligible again to practice before the IRS without further terms or conditions.]

 

[I will   accept a suspend ion for a period of at least (number of months or years) and fully understand and agree that a suspension is public discipline involving disclosure of all information relevant to such discipline.   No sooner than 30 days prior to the expiration of the suspension period, I will be eligible to   submit a petition to OPR for reinstatement to practice before the IRS which petition will be processed in due course.]

 

[I will accept disbarment for a period of(number of months or years) .  No sooner than 10 days prior to the expiration of   the disbarment period, I will be eligible to submit   a petition to OPR for reinstatement, and, pursuant to section 10.81 of Circular 230, after the expiration of the disbarment period, OPR will   consider my petition.]

 

6.   During the period of [suspension or disbarment], I will not engage in practice before the IRS, as that term is defined in section 10.2 of Circular 230 (including any revision thereto occurring during the term of my [suspension or disbarment]).

 

[Include all of these standard conditions for reinstatement.  The standard conditions do not refer to the practitioner's particular tax situation.]

 

7.  I understand and agree that OPR may grant my petition for reinstatement, provided that:

 

a.   Within six months of the date this Consent becomes effective, I file any Federal tax returns now due and owing, and I pay, or make arrangements acceptable to the IRS to pay, any outstanding Federal tax liabilities;

 

b.  During the period of my [suspension or disbarment], I file timely (including any extensions) any Federal returns that become due and owing, and I pay, or make arrangements acceptable tothe IRS to pay, any Federal tax liabilities;

 

c.  During the term of my [suspension or disbarment], I do not engage in, or attempt to engage in, directly or indirectly, practice before the IRS as that term is defined in section 10.2 of Circular 230 (including any revision thereto occurring during the term of my [suspension or disbarment];

 

d.  During the term of my [suspension or disbarment], OPR does not contact me concerning any additional newly alleged violations of Circular 230;

 

e.  At the time I submit my petition for reinstatement, I am otherwise in compliance with all the provisions of Circular 230 in effect at that time; and

 

f.  I submit with my petition for reinstatement documentary evidence that, if my petition is granted, I will be eligible, as defined in Circular 230 section 10.2, to practice before the IRS as [an attorney, a certified public accountant, an enrolled agent, an actuary, an appraiser].

 

8.  I understand that this Offer does not limit, or otherwise alter, the OPR’s authority to disclose, as authorized by law, records and information concerning the violations to which I have admitted in this Offer.

 

I understand that such disclosures will include publication of a notice of my [censure, suspension, disbarment] in the Internal Revenue Bulletin which will includenotice of the violations to which I have admitted in this Offer; and that such disclosures may include other disclosures to the general public, including a response to any inquiry from the general public concerning my disciplinary status.

 

I understand that such disclosures may also include disclosure of the terms of this Offer, and other facts relating to the violations to which I have admitted in this Offer, to any public, quasi-public, or private professional authority, agency, or organization that has granted, or hereafter considers granting, or grants me a license to practice as a [lawyer, accountant, actuary, appraiser, enrolled agent, licensed tax preparer]  to represent taxpayers before any public authority, or to prepare tax returns; and to any public, quasi-public, or private professional association that has accepted, or hereafter considers accepting, or accepts me as a member.  Such authorities, agencies, organizations, and associations will include, but will not necessarily be limited to, those specifically listed below in this Offer.

 

[If the violations include return information include paragraph 9, if not, move on to paragraph 10.

 

9.  Pursuant to 26 U.S.C. 6103(c), I consent to the disclosure by   OPR, of my return information as contained in this Offer to the persons identified below:

 

To the general public, which will include publication of a notice of my [censure, suspension, disbarment] in the Internal Revenue Bulletin, including notice of the violations to which I have admitted in this Offer, and which may include other disclosures to the general public, including a response to any inquiry from the general public concerning my disciplinary status.

 

As listed below, to any public, quasi-public, or private professional authority, agency, or organization that has, at present, granted me a license to practice [law,  accountancy etc], to represent taxpayers before any public authority, or to prepare tax returns; and to any public, quasi-public, or private professional association that has, at present, accepted me as a member; also to any public, quasi-public, or private professional authority, agency, organization, or professional association to which I apply, or may apply, for such license or membership within a period of five years from the effective date of my [censure, suspension, disbarment].

 

10.  Under penalties of perjury, I certify that the following is a complete list of all public, quasi-public, or private professional authorities, agencies, or organizations that have, at present, granted me a license to practice [law or accountancy, tax preparation, as an actuary, as an appraiser], to represent taxpayers before any public authority, or to prepare tax returns; and to any public, quasi-public, or private professional associations that have, at present, accepted me as a member:

 

a.

[Name of authority, agency, organization, or association

State or jurisdiction

Bar number, license number, or member number]

[Repeat as needed for each agency]

 

 

11.  The signature of the Director, OPRon this Offer will constitute acceptance of this Offer, effective as of the date entered on this Offer by the Director.  The effective date invokes all of the terms and conditions in this Offer and begins the period of [suspension, or disbarment].

 

[Practitioner's signature]

 

[Practitioner's name; type or print]

 

Date signed:

 

Practitioner's SSN:

 

Practitioner's address:

 

[Signature of Director, OPR]

 

[Name of Director, OPR]

 

Title:  [Director, OPR,]

 

Effective date:

 

 

Appendix C -1(a)

Appraisal Hypothetical
APPRAISAL HYPOTHETICAL

 

Basic Facts

 

Appraiser X delivers an appraisal for the Estate of Y for purposes of Form 706, the decedent’s estate tax return. Y owned a controlling interest in ABC Company, a manufacturing company. ABC, started by Y fifty years ago, had revenues of $100 million, was very profitable, had little debt and was growing steadily. Y’s interest in ABC constituted the bulk of his personal net worth.

 

Scenario 1

 

During the audit of the estate, the IRS examiner reviewed the appraisal. In reviewing the company files, he found various drafts of the appraisal report. The value determined in the first draft was more than double the value reported on Form 706. In addition, there were notes written by the company’s president to the chief financial officer directing the CFO to “tell the appraiser to reduce the value”. Later on in the process of the audit, a review of the company’s e-mails uncovered a series of conversations between the CFO and the appraiser. In response to the CFO’s request that the value be lowered, Appraiser X complied by explaining to the CFO what steps he would take to reduce the value. No economic explanation or justification was ever discussed.  In response to interrogatories, the appraiser could offer no credible evidence that his lowering of the value was caused by either an error in the draft that needed to be corrected or a change in the economic facts supporting the appraisal.

 

Proposed OPR Response

 

Appraiser X, in addition to violating his appraisal society’s ethical rules against bias and advocacy, has demonstrated incompetence and disreputable conduct in violation of Circular 230 §10.51(a)(13). Incompetence and disreputable conduct includes “giving a false opinion, knowingly, recklessly, or through gross incompetence, including an opinion which is intentionally or recklessly misleading, or engaging in a pattern of providing incompetent opinions on questions arising under the Federal tax laws.”   [OPR suggested penalty here.]

 

Scenario 2

 

During the audit of the estate, the IRS examiner reviewed the appraisal. The examiner noticed the appraiser’s work was not done in conformance with Revenue Ruling 59-60, resulting in clear methodological errors. Further, Appraiser X made several arithmetic mistakes which had a material effect on value. Upon questioning, the appraiser indicated this was the way he had always valued such businesses but admitted he had not reviewed Revenue Ruling 59-60 and had not attended any valuation conferences or classes in “a long time.” He also indicated that he had been in a hurry when he prepared the report and had not checked his work nor had anyone else review it. While his report indicated he was a member of an appraisal society, he had actually let his membership lapse many years before.

 

Proposed OPR Response

 

Appraiser X has demonstrated incompetence and disreputable conduct in violation of Circular 230 §10.51(a)(13). Incompetence and disreputable conduct includes “giving a false opinion, knowingly, recklessly, or through gross incompetence, including an opinion which is intentionally or recklessly misleading, or engaging in a pattern of providing incompetent opinions on questions arising under the Federal tax laws.” “Gross incompetence includes conduct that reflects gross indifference, preparation which is grossly inadequate under the circumstances, and a consistent failure to perform obligations to the client.” In addition, Appraiser X has violated §10.22(a)(1) which specifies that a practitioner must exercise due diligence in preparing or assisting in the preparation of returns. Appraiser X’s work did not reflect adequate competence and was prepared in a careless manner. Mitigating the violations was the fact that the appraiser had not intentionally committed the errors.  [OPR suggested penalty here.]

 

Scenario 3

 

During the audit of the estate, the IRS examiner reviewed the appraisal. The examiner thought the value seemed low. Appraiser X followed proper valuation procedure and methodology, including close adherence to Revenue-Ruling 59-60. The report included a detailed explanation of the appraiser’s assumptions and conclusions. The supporting documentation was thorough and the report contained no arithmetic errors. The examiner strongly disagreed with the appraiser’s judgment on several issues.  For example, in the Market Approach to value, the examiner took issue with Appraiser X’s selection of comparable companies. In the examiner’s opinion, the comparables selected resulted in the use of multiples for income and cash flow that were too low for the subject company. In addition, under the Income Approach to value, the examiner believed the discount rate selected by the appraiser was far too high, resulting, again, in a value that was unreasonably low. Based primarily on these differences, the value the examiner determined for Y’s interest in ABC Company was far higher than that determined by the appraiser and a notice of deficiency was prepared.

 

Proposed OPR Response

 

Appraiser X has not violated IRS Circular 230 . The dispute here is a matter of judgment and opinion. The valuation controversy will be settled in the IRS appellate process or in Tax Court.

 

 

Appendix C -1(b)

 

Bond Counsel Hypothetical

 

Public Finance Bond Counsel

Circular 230 Hypotheticals

1. Abandoned Project

Counsel is engaged to serve as bond counsel to a general purpose local government (Issuer) in connection with a tax-exempt bond financing for a major, public-private infrastructure project.  Counsel knows that the project is controversial.

As bond counsel, Counsel will deliver an unqualified opinion in connection with the issuance of the bonds to the effect that the interest on the bonds is exempt from federal and State income tax.  Substantially prior to the bond sale, Counsel sends a preliminary tax document (which may be in the form of a memorandum, questionnaire, checklist, or draft closing tax matters certificate) to representatives of the Issuer and to the private participant in the project.  The preliminary tax documents relate to, among other items, (i) the project to be financed with the bonds, (ii) the expected status of commencement and completion of construction, (iii) the expected investment of proceeds of the bonds pending application to project costs, (iv) the expected sources of repayment of the bonds and (v) the expected use of the project during the life of the bonds.  The recipients respond appropriately to the preliminary tax documents, and any questions raised by the responses are resolved by discussions between Counsel and the representatives of the Issuer or the private party.  Counsel reviews underlying documents, either transactional or general, which bear specifically and importantly on relevant facts.  Counsel does not establish documentation for facts when Counsel believes this documentation to be unnecessary.  Counsel incorporates factual material from the preliminary tax documents and clarifying discussions into the closing tax matters certificates for execution by an authorized official of the Issuer and an officer of the private party.  The Issuer’s in-house attorney tells Counsel that the project, while controversial, is legal and fully authorized by the Issuer and that the in-house attorney will deliver an opinion to this effect at the bond closing; Issuer’s in-house attorney does so.  Counsel delivers an unqualified opinion as to tax exemption and validity of the bonds at the closing.

Some days after the bonds are issued, the private party announces it is withdrawing from participation in the project, citing lack of public support.  The withdrawal does not violate any legal obligation of the private party in an underlying transaction document but is contrary to previous public statements of the private party’s chief executive officer and conflicts with tax covenants and represented expectations in the closing tax matters certificate of the private party.  The Issuer is unable to find an alternative participant for the project, the project is abandoned before expenditure of the proceeds, and the bond proceeds are used to redeem the bonds.  Regardless of whether in a subsequent examination of the bonds the Internal Revenue Service might conclude that it was unreasonable for the Issuer to expect to spend the proceeds of the bonds on the project, Counsel acted professionally and in accordance with the standards provided in Circular 230 in delivering a bond counsel opinion at the issuance of the bonds that the interest on the bonds was tax-exempt.  Moreover, actions taken by the Issuer and/or the private party after the issuance of the bonds and the delivery of Counsel’s opinion have no effect on the determination that Counsel acted professionally and in accordance with the standards provided in Circular 230.

2. No Specific Projects

Counsel is engaged to serve as bond counsel to a general purpose local government (Issuer) in connection with a tax-exempt financing.  Counsel informs Issuer's chief financial officer (CFO) that Counsel's opinion on the tax exemption of the bonds will be based, in part, on certifications of CFO on behalf of Issuer that, as of the issue date of the bonds, Issuer reasonably expects to expend at least 85 percent of the net sale proceeds of the bonds on capital projects within 3 years of the issue date and that completion of the capital projects and expenditure of the net sale proceeds will proceed with due diligence.  CFO responds that Issuer has no specific capital projects planned, and that significant opposition exists from members of Issuer's governing board to commence new capital projects in the foreseeable future.  Several members of Issuer's governing board confirm to Counsel that no specific capital projects are planned.  CFO states that the lack of specific projects is not a concern, because the proceeds of the bonds will be invested in a guaranteed investment contract with a yield exceeding the yield on the bonds, and because the Issuer will qualify for an exception from arbitrage rebate for small issuers.  Further, CFO states that the bonds can be retired using proceeds of the bonds (including investment earnings thereon), and the remaining arbitrage profit can be retained by Issuer.  Counsel provides CFO with a closing tax matters certificate that includes certifications that Issuer reasonably expects to expend at least 85 percent of the net sale proceeds of the bonds on capital projects within 3 years of the issue date and that completion of the capital projects and expenditure of the net sale proceeds will proceed with due diligence.  Counsel accepts the closing tax matters certificate executed by CFO and renders its opinion on the tax exemption of the bonds.  Counsel does not ask any follow-up questions regarding prior statements by CFO and members of Issuer's governing board that contradict the closing tax matters certificate and does not obtain any further information about potential capital projects.  Under provisions in Circular 230, a practitioner may not give written advice concerning one or more federal tax issues if the practitioner unreasonably relies upon representations of the taxpayer or any other person or does not consider all relevant facts that the practitioner knows or should know.  Counsel's reliance upon the closing tax matters certificate executed by CFO was unreasonable in light of prior statements to Counsel by CFO and members of Issuer's governing board about the lack of planned capital projects and in light of Counsel's failure to obtain any other information supporting the statements in the closing tax matters certificate.

 

3. Reliance on 501(c)(3) Opinion

 

            Statewide health care agency issues qualified 501(c)(3) bonds for the benefit of nonprofit hospital.  Counsel is engaged to serve as bond counsel and delivers an unqualified bond opinion to the effect that interest on the bonds is not includible in gross income of the holders for federal income tax purposes.  In performing its tax analysis, Counsel has performed due diligence with respect to hospital’s expected use of the property to be financed, including hospital’s  contracts concerning the property, and various other matters which could affect hospital’s 501(c)(3) status; Counsel has not investigated all facts or analyzed all issues which could affect hospital’s 501(c)(3) status.  Counsel’s bond opinion explicitly relies on the opinion of the hospital’s attorney for the conclusion that hospital is a 501(c)(3) organization.  This reliance is noted in the public offering document in the initial sale of the bonds.  Counsel discussed the substance of the 501(c)(3)opinion with hospital’s attorney, and Counsel has no reason to believe that the opinion should not be relied upon or that the opinion is incorrect or inconsistent with an important fact or assumption.  Counsel in good faith relies on the opinion of hospital’s attorney without further investigation or verification.

 

            After the bonds are issued, the Internal Revenue Service revokes hospital’s 501(c)(3) status because of certain matters unrelated to the bonds or the financed property, and about which Counsel had no knowledge or reason to know.  Counsel reasonably relied on the  opinion of hospital’s attorney with respect to hospital’s 501(c)(3) status, and therefore Counsel will be considered to have exercised due diligence with respect to hospital’s  501(c)(3) status for purposes of Circular 230.

 

4. Projections

Counsel is engaged to serve as bond counsel to a general purpose local government (Issuer) in connection with tax-exempt lease revenue bonds for the purchase of an office building.  The bonds are scheduled to mature in 20 years.  The tax-exemption on the bonds is dependent upon the Issuer’s reasonable expectation that the office building will be leased to State government agencies and departments.  On the date of issuance of the bonds, approximately 93% of the building is occupied by a State department (Department) under a lease scheduled to expire within 4 years of the date of issuance of the bonds (Lease).  Counsel reviews the Lease with Department and another lease in place with a private business at issuance.  Counsel and a representative of Issuer also participate in discussions with the State’s general services agency in charge of leasing governmental space (GSA).  GSA confirms that Department would not be extending the Lease, as its permanent building is scheduled to be completed before the expiration of the Lease.  Counsel and Issuer inquire about potential future leases with other State agencies and departments to replace the Lease, but they are told by GSA that at most it might have a need for additional short-term, temporary space needs.  GSA could make no commitments or guarantees that its State agencies would have leasing needs for the office space.  Counsel reviews projections of Issuer’s financial advisor showing that the Lease would extend throughout the term of the bonds.  Department vacates the office building upon the expiration of the Lease.  The bonds go into default when the State does not lease any additional temporary space and Issuer secures private business tenants for only a portion of the vacated space.  The projections are attached as an exhibit to the closing tax matters certificate prepared by Counsel and executed by Issuer; the projections are cross-referenced in Issuer’s stated expectation that the project would be occupied by the State and proceeds would not be reasonably expected to be used for private business use.  Under provisions in Circular 230, a practitioner may not give written advice concerning one or more federal tax issues if the practitioner unreasonably relies upon representations of the taxpayer or any other person or does not consider all relevant facts that the practitioner knows or should know.  Counsel's reliance upon projections which it knew to be incorrect and incomplete was unreasonable in light of information from GSA regarding the Lease and the State’s future leasing plans and in light of Counsel's failure to obtain any other information supporting the statements in the closing tax matters certificate.

Version 2.  The facts are the same, except Department’s lease at issuance of the bonds is for a term in excess of the term of the bonds, but due to financial difficulties, the State fails to appropriate funds for rental payments.  As a result, Department vacates the building and the bonds default.  Counsel’s reliance on the projections was reasonable because the facts of the lease term were correctly included in the projections upon which Counsel relied.  Actions taken by the Department after the issuance of the bonds and the delivery of Counsel’s opinion have no effect on the determination that Counsel acted professionally and in accordance with the standards provided in Circular 230.

 

Appendix C -1(c)

 

Noncompliance Hypothetical


 

HYPOTHETICAL - NONCOMPLIANCE

 

Basic Facts:

 

X is a federally authorized tax practitioner. X has a practice which includes preparation of individual and entity tax returns and tax planning for individuals and businesses. X has been in practice for 8 years and has grown his Schedule C business sufficiently to require employment of three other federally authorized tax practitioners and four administrative staff. X insures that he and the practitioners he employs obtain the minimum requisite amount of continuing education credits, including ethics credits, as required by their respective licensing agencies. Neither X, nor any of his professional employees, have ever been the subject of inquiry by their state licensing authority or by OPR.

 

Scenario 1

 

X had a particularly difficult 2005 both on a personal and professional level. His marriage disintegrated mid-year, and he lost a major family group as clients. The family group represented 25% of X’s billings in 2004. X was too distracted by these events to file his own 2004 tax return in April 2005 so he put himself on extension and made a substantial payment  with the extension voucher (in addition to the “safe” estimated tax payments he made in each of the four quarters) . He believed he had paid whatever tax liability would be reflected on his return when eventually filed. Matters didn’t improve by the extended due date so X obtained an additional extension of time to file until October 15, 2005. X then failed to file his 2004 return by the October 15 due date. Over the next two years X continued to be distracted by his personal and financial pressures and expended additional time and effort attempting to replace the lost business income resulting from the loss of a major client. In 2006 and 2007, X followed the same pattern as 2005: he extended his 2005 and 2006 returns for the maximum period, having full-paid the tax he believed to be due, and then failed to file the returns by the extended due dates. In 2008, X came to OPR’s attention just as he had taken steps to correct his failure to file by preparing and filing his 2004-2006 returns, all of which show modest overpayments of tax for each year without regard to carryover credits.

 

Proposed OPR response: X violated Circular 230 §10.51(a)(6) by failing to timely file his personal income tax returns. He did, however, take steps to correct the failure prior to being contacted by OPR and his failure to file did not result in any financial harm. In addition, willfulness is mitigated by extenuating circumstances. Therefore X should receive [insert recommendation regarding appropriate range of sanctions].

 

Scenario 2

 

X had a particularly difficult 2005 both on a personal and professional level. His marriage disintegrated mid-year, and he lost a major family group as clients. The family group represented 25% of X’s billings in 2004. X was too distracted by these events to file his own 2004 tax return in April 2005 so he put himself on extension and made a substantial payment  with the extension voucher (in addition to the “safe” estimated tax payments he made in each of the four quarters). He believed he had paid whatever tax liability would be reflected on his return when eventually filed. Matters didn’t improve by the extended due date so X obtained an additional extension of time to file until October 15, 2005. X then failed to file his 2004 return by the October 15 due date. Over the next two years X continued to be distracted by his personal and financial pressures and expended additional time and effort attempting to replace the lost business income resulting from the loss of a major client. In 2006 and 2007, X followed the same pattern as 2005: he extended his 2005 and 2006 returns for the maximum period, having full-paid the tax he believed to be due, and then failed to file the returns by the extended due dates. In 2008, X’s failure to file came to OPR’s attention.

 

Proposed OPR response: X violated Circular 230 §10.51(a)(6) by failing to timely file his personal income tax returns. Willfulness is mitigated by extenuating circumstances. In addition, X’s failure to file did not result in any financial harm. If X’s returns are subsequently promptly prepared and filed, and show no tax due in any year, X should receive [insert recommendation regarding appropriate range of sanctions].

 

Scenario 3

 

X had a particularly busy 2005 both on a personal and professional level. She got married mid-year and her practice has been growing by leaps and bounds. X was too distracted by these events to file her own 2004 tax return in April 2005 so she put herself on extension assuming that her estimated tax payments were sufficient to cover any tax due. When the distractions didn’t subside by the extended due date, X obtained an additional extension of time to file until October 15, 2005. X then failed to file her 2004 return by the October 15 due date. Over the next two years X continued to be distracted by her marital relationship and her frantic business schedule. In 2006 and 2007, she extended her 2005 and 2006 returns for the maximum period and then failed to file the returns by the extended due dates. She failed to make estimated tax payments for her 2005 and 2006 returns and sent no payments with her extension requests. In 2008, X’s failure to file came to OPR’s attention just as she had taken steps to correct the failure to file and failure to pay by preparing and filing her 2004-2006 returns and paying all tax and interest due.

 

Proposed OPR response:  X violated Circular 230 §10.51(a)(6) by failing to timely file her personal income tax returns and failing to timely pay any tax due. She did, however, correct the failure prior to being contacted by OPR and her failure to file did not result in any financial harm. In addition, willfulness is mitigated by extenuating circumstances. X should receive [insert recommendation regarding appropriate range of sanctions].

 

Scenario 4

 

X had a particularly busy 2005 both on a personal and professional level. She got married mid-year and her practice has been growing by leaps and bounds. X was too distracted by these events to file her own 2004 tax return in April 2005 so she put herself on extension assuming that her estimated tax payments were sufficient to cover any tax due. When the distractions didn’t subside by the extended due date, X obtained an additional extension of time to file until October 15, 2005.  X then failed to file her return by the October 15 due date. Over the next two years X continued to be distracted by her marital relationship and her frantic business schedule. In 2006 and 2007, she extended her 2005 and 2006 returns for the maximum period and then failed to file the returns by the extended due dates. She failed to make estimated tax payments for her 2005 and 2006 returns and sent no payments with her extension requests. In 2008, X’s failure to file came to OPR’s attention. After contact from OPR, X promptly filed and paid all the tax, penalty and interest due with respect to each of the three delinquent tax years.

 

Proposed OPR response: X violated Circular 230 §10.51(a)(6) by failing to timely file her personal income tax returns and failing to timely pay all tax due. She did, however, correct the failure after being contacted by OPR. Willfulness is mitigated somewhat by extenuating circumstances. X should receive [insert recommendation regarding appropriate range of sanctions].

 

Scenario 5

 

X had a particularly busy 2005 both on a personal and professional level. She got married mid-year and her practice has been growing by leaps and bounds. X was too distracted by these events to file her own 2004 tax return in April 2005 so she put herself on extension assuming that her estimated tax payments were sufficient to cover any tax due. When the distractions didn’t subside by the extended due date, X obtained an additional extension of time to file until October 15, 2005. X then failed to file her return by the October 15 due date. Over the next two years X continued to be distracted by her marital relationship and her frantic business schedule. In 2006 and 2007, she extended her 2005 and 2006 returns for the maximum period and then failed to file the returns by the extended due dates. She failed to make estimated tax payments for her 2005 and 2006 returns and sent no payments with her extension requests. In 2008, X’s failure to file came to OPR’s attention. After contact from OPR, X promptly filed each of the three delinquent tax year’s returns. However, she was unable to pay the accumulated liabilities in full and submitted an offer in compromise to the IRS for consideration.

 

The offer is accepted.

 

Proposed OPR response: X violated Circular 230 §10.51(a)(6) by failing to timely file her personal income tax returns and failing to timely pay all tax due. She did, however, correct the failure after being contacted by OPR. Willfulness is mitigated somewhat by extenuating circumstances. X should receive [insert recommendation regarding appropriate range of sanctions].

 

The offer is rejected.

 

Proposed OPR response: X violated Circular 230 §10.51(a)(6) by failing to timely file her personal income tax returns and failing to timely pay all tax due. She did, however, partially correct the failure after being contacted by OPR. Willfulness is mitigated somewhat by extenuating circumstances. X should receive [insert recommendation regarding appropriate range of sanctions].

 

Scenario 6

 

X has several entrepreneurial clients who are always pushing the envelope of risky investments and highly leveraged business transactions. The clients all work for business entities from which they receive W-2's for tax reporting purposes. The investment and business activities are reported on Forms 1099 or K-1. In 2006, one of these clients became embroiled in a business dispute and failed to get X his tax materials in time to timely file, even after a maximum extension of time. X met with the client and advised the client that since he has been “overwithheld” every year that she has prepared his return, there should be no consequences for his failure to file his 2006 tax return and he should get his data to her as soon as possible.

 

Proposed OPR response: X violated Circular 230 §10.51(a)(7) by suggesting there should be no consequences for the client’s failure to file.  Since the misconduct involved a single incident, X should receive [insert recommendation regarding appropriate range of sanctions].

 

Different result if client in Scenario 6 has missed the filing deadline several years in a row with the same advice given by X?

 

Proposed OPR response: X violated Circular 230 §10.51(a)(7) by suggesting there should be no consequences for the client’s failure to file.  Since there are no apparent mitigating factors, X should receive [insert recommendation regarding appropriate range of sanctions].

 

Different result if X has several clients to whom she gave advice similar to that in Scenario 6 in multiple years?

 

Proposed OPR response: X violated Circular 230 §10.51(a)(7) on multiple occasions by suggesting to clients that there should be no consequences for the client’s failure to file.  Since there are no apparent mitigating factors, X should [insert recommendation regarding appropriate range of sanctions].

 

 

Appendix C -2(a)

 

Cover Letter – Example 1


 

Dear             :      

On behalf of the OPR subcommittee of IRPAC, thank you for submitting [a hypothetical] [hypotheticals] developed by [insert name of organization]. Your organization’s participation in this important effort is greatly appreciated.

Our committee has received hypotheticals from a number of different organizations in a variety of formats. In order to achieve some consistency in format, we have created a sample hypothetical for organizations to use as a guide in developing hypotheticals. A copy of this sample hypothetical is enclosed for your organization’s review. I’d appreciate it if you would review the format of the sample hypothetical and then revise your hypothetical(s) as necessary.  

 

Each hypothetical should generally include the following:

 

  • A fact pattern
  • A statement regarding the applicable sections of Circular 230
  • An opinion as to whether or not the conduct is actionable (along with the reason why or why not)

 

If you have an opinion regarding the appropriate range of sanctions for a particular violation, you may also include that with your submission. Also, if you are aware of scenarios where the facts may be such that it could be difficult for the practitioner to determine the appropriate conduct, you may submit those scenarios without providing an opinion as to whether or not the conduct is actionable.

 

Our committee has been working with OPR for several months and now has a better understanding how these hypotheticals may be used by OPR. It is anticipated that OPR will use the hypotheticals:

 

  • to educate practitioners regarding what conduct violates Circular 230 and what conduct does not;
  • to provide guidance to practitioners in situations involving difficult ethical issues where it may be difficult for practitioners to determine what conduct is appropriate; and/or
  • to illustrate how OPR views various aggravating and mitigating factors and the range of sanctions OPR might impose in different situations.

 

This is an ongoing effort so additional hypotheticals may be submitted at any time.

 

 

We are particularly interested in hypotheticals involving the following sections of Circular 230, but all submissions are welcome:

 

  • §10.20 Information to be furnished
  • §10.21 Knowledge of a client’s omission
  • §10.22 Diligence as to accuracy
  • §10.29 Conflicting interests
  • §10.30 Solicitation
  • §10.34 Standards with respect to tax returns and documents, affidavits and other papers (particularly 10.34(d) – Relying on information furnished by clients)

 

Thank you again for your assistance. Please do not hesitate to contact me if you have any questions.

 

Sincerely,

 

Enclosure

 

 

Appendix C -2(b)

 

Cover Letter – Example 2

Dear             :

            

I am a member of a new OPR subcommittee of IRPAC that is working with the Office of Professional Responsibility (OPR) to provide guidance to the practitioner community on Circular 230 issues. One of our primary tasks is to solicit and develop hypotheticals OPR can use in published guidance:

 

  • to educate practitioners regarding what conduct violates Circular 230 and what conduct does not;
  • to provide guidance to practitioners in situations involving difficult ethical issues where it may be difficult for practitioners to determine what conduct is appropriate; and/or
  • to illustrate how OPR views various aggravating and mitigating factors and the range of sanctions OPR might impose in different situations.

 

To ensure we develop hypotheticals that address the topics most relevant to the practitioner community as a whole, we are soliciting input from a variety of professional organizations such as the

ABA , AICPA, AAA-CPA, NAEA, NATP, NSA, NSTP, etc. If your organization is interested in submitting hypotheticals for consideration, please send them to me [via email]. This is an ongoing project so your input is welcome at any time.

 

Our committee is particularly interested in hypotheticals involving the following sections of Circular 230, but all submissions are welcome:

 

  • §10.20 Information to be furnished
  • §10.21 Knowledge of a client’s omission
  • §10.22 Diligence as to accuracy
  • §10.29 Conflicting interests
  • §10.30 Solicitation
  • §10.34 Standards with respect to tax returns and documents, affidavits and other papers (particularly 10.34(d) – Relying on information furnished by clients)

 

Each hypothetical should generally include the following:

 

  • A fact pattern
  • A statement regarding the applicable sections of Circular 230
  • An opinion as to whether or not the conduct is actionable (along with the reason why or why not)

 

If you have an opinion regarding the appropriate range of sanctions for a particular violation, you may also include that with your submission. I’ve attached a sample hypothetical so you can see how your hypotheticals should generally be formatted.

 

If you are aware of scenarios where the facts may be such that it could be difficult for the practitioner to determine the appropriate conduct, you may also submit those scenarios without providing an opinion as to whether or not the conduct is actionable.

 

Thank you for your consideration. Please do not hesitate to contact me if you have any questions.

 

Sincerely,

 

Enclosure

 

 

Appendix D -1

 

“Soft” Letter

“SOFT” LETTER DRAFT

Date

 

John Q. Practitioner

Enrolled Agent

123 Main Street

Anytown, XX 12345-6789

 

Dear Mr. Practitioner:

 

This letter is being sent pursuant to section 10.53 of Treasury Department Circular No. 230 (31 CFR Part 10, effective September 26, 2007), a copy of which is enclosed.

 

This office recently received information which raised questions as to whether there had been a violation by you of Subpart B, or Subpart C section 10.51, of the regulations governing practice before the Internal Revenue Service. A summary of the alleged facts, and of the specific provisions allegedly violated, is attached hereto for your reference.

 

Upon review, this office has determined that the allegations, deemed to be true for purposes of our analysis, do not currently demonstrate behavior, or a pattern of behavior, which warrants further investigation or action by the Office of Professional Responsibility. This letter is being sent to you solely for the purpose of advising you of the allegations, and of our determination not to pursue the matter further at this time.  No response is required.

 

Pursuant to Section 10.53(c), the allegation report will be retained by the Office of Professional Responsibility for a period of ten years, as permitted under the applicable records control schedule approved by the National Archives and Records Administration, and as designated in the Internal Revenue Manual section 1.15.11-1(4).   Because the allegation report will be retained for a period of time, and because there is the possibility that the allegations contained therein will be viewed as cumulative conduct should any future referrals to this office occur, you are invited to provide a written response to the allegation report. Any written response you provide will be maintained with the allegation report for the period referenced above but will not receive a response in any form from OPR at this time.

 

It is important that you understand that the decision not to pursue the allegations against you at this time is based upon the determination that a single incident does not reflect the requisite willfulness required to justify a full investigation. However, the conduct alleged, if true, and absent any mitigating factors, does constitute a technical violation of the provisions of Circular 230 at section(s) [insert appropriate section(s)]. Should there be future allegations of the same, or of a different nature, which constitute violations of Circular 230 provisions, it is likely that an investigation and disciplinary action would ensue, and that the enclosed allegation report would become a part of that investigation. Consequently, we urge you to consider the allegations contained in the enclosed summary objectively, and take steps to understand their nature and basis, in order to modify your future conduct accordingly.

 

Should you wish to submit a written response to the allegations, please address them to: [Name of OPR Attorney], Enforcement Attorney, by fax at (202) 622-XXXX, by email (non-secure) at [name.of.attorney@irs.gov], or by correspondence at: Internal Revenue Service, Office of Professional Responsibility, Attn: SE:OPR,

1111 Constitution Avenue, N.W. , Room 7238/IR, Washington , DC 20224 .

`

Sincerely,

 

Michael R. Chesman

Director

Office of Professional Responsibility

 

Enclosures: as stated

 

 

Appendix G-1


 

OPR Public Relations

 

Outreach

 

  • Continue to liaise with various professional and educational groups ( ABA /AICPA/ State CPA Societies/EAs/NASBA) to work together on getting the word out re OPR to their members
  • Continue to have an active presence at the IRS Nationwide Tax Forums by staffing an exhibitor booth, making various presentations, and perhaps conducting workshops or discussion forums
  • Continue to have an active presence at the ABA Tax Conferences by staffing an exhibitor table and making various presentations
  • Have an active presence at CPA conferences by staffing a table or booth and making various presentations
  • Consider preparing a periodic (quarterly?) OPR electronic newsletter or update which focuses on introducing OPR to the practitioner community (particularly CPAs) and also providing various updates and other information (a really good model for this is the monthly electronic update from IRS EO)
  • Consider preparing "canned" introductory materials which can be disseminated to the practitioner community for use in their internal training programs (for instance, some firms conduct monthly educational sessions for their personnel on a wide range of topics, the firm could easily undertake an hour presentation on OPR and Circular 230 with “canned” materials or modules from OPR)
  • Utilize presentations from the stakeholder-liaison library
  • EO has issued many informative fact sheets which help get the word out re various issues; try to get links on the monthly IRS e-news
  • Liaise with law schools (e.g. LLM programs and MBT programs) and the Big 4 (internal training classes) to see if they can add classes on IRS practice and procedures (with substantive modules addressing OPR)
  • Aim to get more mentions and references in publications such as Tax Notes Today
  • Liaise with tax software developers and companies to explore ways that they can help tax preparers become aware of the Circular 230 rules and what OPR is also about
  • Try to get news releases in magazines such as Practical Accountant and Accounting Today


 

Brochure (General)

 

  • Design and disseminate an inexpensive tri-fold promotional brochure to hand out at conferences and other gatherings of practitioners (should be colorful and easy to read); should be similar to the existing “How to Become an Enrolled Agent” brochure, however, should be focused on providing general information regarding OPR and Circular 230 to all practitioners
  • At this juncture, the information contained within the brochure should be focused on introductory information regarding OPR as opposed to providing too much detail regarding Circular 230 or other more technical topics

Education

 

  • Liaise with the state CPA societies to attempt to get OPR modules added to their practitioner state ethics CPE/CLE presentations (an ethics course through the California CPA Society contains scant mention of OPR or Circular 230)
  • Liaise with the administrators for the LLM and MBT programs across the United States to make sure that OPR and Circular 230 are part of the IRS procedures courses which are given at their schools
  • Initiate programs to “teach the teachers” to leverage on existing professionals to get the word out re OPR
  • Conduct webinars/conference calls on Tax Talk Today and conduct phone forums
  • Prepare and issue easy-to-read materials (perhaps a comic book similar to what the Federal Reserve issued) to get information to the college students and new CPAs; or perhaps produce and post a piece on YouTube in an effort to reach the younger practitioners
  • Consider the creation of an interactive educational web site similar to stayexempt.org
  • Educate the practitioner community regarding the difference between §6694 of the Internal Revenue Code and Circular 230
  • Consider changing the name of “Circular 230” when referencing such in any published materials (for example, “Practitioner Ethics Code”)


 

 

OPR's Internet Site

 

  • Present more basic and introductory information on OPR's web site
  • Update the web site on a more regular basis
  • Try to obtain a separate tab on the Internal Revenue Service web page (the OPR web page is probably more "important" to find easily than the Tax-Exempt Bond Community, for instance)
  • The OPR web site needs to be far more user friendly to facilitate easily locating information posted there
  • Consider adding a Circular 230 FAQs on the web site
  • Need to have more “positive” information on the web site (e.g. letting the practitioner know what they should be doing)

 



[1] These regulations were amended effective September 26, 2007, and certain substantive provisions apply prospectively to conduct that occurred after that date.  Conduct engaged in prior to September 26, 2007, will be judged by the regulations in effect at the time the conduct occurred as set forth in Circular 230.  Subpart B, subsections 10.33, 10.35, 10.36, and 10.37 apply to conduct engaged in on, or after June 20, 2005.  A pre-publication version of the new applicable regulations is attached to this letter as reference.

[2] These regulations were amended effective September 26, 2007, and certain substantive provisions apply prospectively to conduct that occurred after that date.  Conduct engaged in prior to September 26, 2007, will be judged by the regulations in effect at the time the conduct occurred as set forth in Circular 230.  Subpart B, subsections 10.33, 10.35, 10.36, and 10.37 apply to conduct engaged in on, or after June 20, 2005.  A pre-publication version of the new applicable regulations is attached to this letter as reference.

Page Last Reviewed or Updated: 25-Jun-2013